Limitless, the property arm of struggling state conglomerate Dubai World which was set up to expand overseas business, is backing out of a plan to build hundreds of luxury homes in Malaysia as it looks to shore up its finances. Cash strapped Limitless is selling off its stake in a partnership with Malaysia’s Bandar Raya Developments to develop waterfront land in the southern city of Nusajaya in what is also a blow for the region as foreign investment declines.
Limitless, which was set up in 2006 to focus mainly on overseas development and is now under the management if its sister company Nakheel, hopes to sell its 60% share for $23.8 million.
The project has been part of an ambitious plan to cash in on growing demand in south east Asia for property. Limitless formed joint ventures with developers in Vietnam, Malaysia and Indonesia. Among them were the $220 million Halong Star mixed use development in Vietnam and the $1.7 billion Rasuna Epicentrum in Jakarta.
Asked what would happen now in the region a company spokeswoman said; ‘We continue to review our business activity to reflect market conditions’. She added that the Limitless office in Singapore is still open.
Work has started on overseas projects in Saudi Arabia, Jordan and Vietnam but others in Russia, India and Pakistan have been either stalled or slowed. Plans for a waterfront development in Karachi have been cancelled and a housing project with India’s largest developer DLF near Bangalore has also stalled.
The move comes as Nakheel, the developer behind Dubai’s iconic palm shaped man made islands, is hoping to sign a debt restructuring deal at a meeting with financial creditors on Wednesday as it restructures $10.5 billion of debt. Dubai World owes financial and trade creditors total of $23.5 billion. Nakheel has already started paying trade creditors 40% of the amount owing as part of a wide ranging offer announced in March.
Meanwhile Dubai Properties, part of the business empire of the emirate’s ruler, plans to hold an auction for three beach side plots of land next month as Dubai struggles under a weight of sovereign and corporate debt.
Dubai Properties, part of Dubai Holding, said in an advertisement that the auction would take place on August 29 for the lease of three beach club plots at Jumeirah Beach Residence Community.
Credit rating agency Moody’s last week downgraded Dubai Holding’s loss making main operating arm, Dubai Holding Commercial Operations Group (DHCOG), to B2 in its highly speculative category of ratings, taking account of weakness in Dubai’s real estate market and uncertainty over the company’s debt restructuring.